DOJ Gets Tougher on Corporate Crime

Earlier today, Deputy Attorney General Lisa Monaco rolled out a series of tough new DOJ policies to hold corporations and executives accountable for criminal conduct and rolled back a series of Trump Administration policies that she viewed as too lenient, particularly for corporations that are “repeat offenders” in civil, regulatory, and criminal enforcement actions. In a speech at the ABA’s National Institute on White Collar Crime, Monaco left no doubt about DOJ’s new stance. These policy changes substantially raise the stakes for corporations in heavily regulated industries that inherently face a greater likelihood of enforcement action, and they were clearly meant to spur companies to redouble their focus on effective compliance programs.

Changes to Corporate Criminal Enforcement Policies

Monaco described several changes to DOJ’s corporate criminal enforcement policies designed to strengthen prosecutors’ hand in holding individuals and corporations accountable.

• Broadening Past Conduct Considered in Criminal Resolutions. Monaco announced that in determining the appropriate resolution for a company, DOJ would now examine a company’s “whole criminal, civil and regulatory” record. This represents a material shift in DOJ policy, which historically limited the evaluation of a company’s past record to similar criminal misconduct. Previously, a company with a history of civil or regulatory settlements but no prior criminal record could come to DOJ in a criminal matter with a clean slate. Under this new framework, however, that company’s prior civil resolutions can factor into DOJ’s demanding a harsher criminal penalty. This is a significant change that could have far-reaching implications for corporations in heavily regulated industries such as the financial or healthcare industries.
• Return to Yates Memo Cooperation Credit. In 2015, then-Deputy Attorney General Sally Yates issued a memorandum (the “Yates Memo”) prioritizing the prosecution of individuals involved in corporate misconduct. Among other things, the memo required corporations seeking cooperation credit to provide “all relevant facts” and “identify all individuals” involved in the corporate misconduct. In 2018, the Trump Administration rescinded this guidance as part of its loosening of several policies governing corporate criminal liability. The Trump Administration replaced it with a requirement that corporations identify only those individuals “substantially involved” in the misconduct. Today, Monaco returned to the Yates Memo’s more aggressive standard, eliminating the “substantially involved” requirement, and reiterating that companies must identify “all individuals” involved in the misconduct to be eligible for cooperation credit.
• Corporate Monitorships No Longer Disfavored. During the final years of the Obama Administration, the number and scope of corporate monitorships increased substantially. But the Trump Administration reduced the number of such monitorships and issued guidance that was widely viewed as discouraging their use. Monaco rescinded that guidance today, and announced that “there is no default presumption against corporate monitors.” In deciding whether to impose a monitor, DOJ routinely examines the strength of a company’s existing compliance program, whether it self-reported the conduct at issue, and the level of its cooperation with DOJ.
• Heightened Scrutiny of Deferred Resolutions. Monaco also indicated that her office will examine existing non-prosecution agreements (NPAs) and deferred prosecution agreements (DPAs) to ensure that companies are complying with their obligations. Monaco emphasized that NPAs and DPAs are not a “free pass” and noted that DOJ recently sent breach notifications to two corporations. Historically, DOJ rarely pursued claims that a party had breached those types of agreements. These new actions are of a piece with DOJ’s ramped up approach and presage a tougher stance on the enforcement of criminal resolutions and heightened scrutiny for the companies bound by them.

What Companies Should Do Next

Monaco’s remarks send a clear message to corporations to step up their compliance efforts. If they do not, they may find themselves in the crosshairs of a vigorous criminal investigation and prosecution. In response, companies should reexamine their compliance measures to forestall misconduct and, if it occurs, to catch it early and nip it in the bud. And, where weaknesses or compliance issues are identified, companies should act swiftly to demonstrate their commitment to accountability and ensure remediation. Otherwise, DOJ is prepared to use all of the enforcement tools at its disposal to prosecute responsible individuals and the entities that committed the crimes.

These policy changes will have their most immediate and significant effect on larger enterprises and those in more heavily regulated industries. These entities are more likely to face repeat encounters with the government and have recently settled criminal, civil, or regulatory enforcement matters. In light of DOJ’s new approach, such companies have enhanced incentives to ramp up and adequately staff and audit their compliance programs.